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WILL RAPIDLY GIVE WAY AGAIN TO SQUAWKS OF PAIN. YET THEY SEEM UNABLE TO COMPREHEND THAT THE CORRUPTION, SLOVENLY PLANNING, DEPENDENCE ON PERSONAL RELATIONSHIPS ETC WHICH CHARACTERISE THE SYSTEM NOT JUST IN PEKING, BUT MORE STRIKINGLY, JUST ACROSS
THE BORDER IN SHENZHEN AND AROUND THE PEARL RIVER DELTA, IS HELD AT BAY ONLY BECAUSE LAW IN HONG KONG IS DECISIVE WHEREAS IN CHINA IT IS HELD AT NAUGHT.
THE ECONOMY.
6.
AGAINST THAT BACKGROUND, HONG KONG APEPARS TO BE THRIVING. THE HANG SENG INDEX IS AT AN ALL-TIME HIGH, HAVING RISEN 35 PERCENT IN THE LAST 10 MONTHS. PROPERTY PRICES AND RENTS ARE REACHING UNREALISTICALLY (AND PROBABLY UNSUSTAINABLY) HIGH LEVELS. GDP GROWTH THIS YEAR IS ESTIMATED AT 5.5 PERCENT. GROWTH IN NEIGHBOURING GUANGDONG CONTINUES TO GALLOP ALONG AT 20 PERCENT THIS YEAR (30 PERCENT LAST YEAR). THE WIDER ASIA-PACIFIC REGION CONTINUES TO DO WELL, DESPITE DIFFICULTIES IN JAPAN AND KOREA. BUT THERE ARE CLOUDS. INFLATION WHILE LOWER THAN LAST YEAR REMAINS HIGH, THOUGH MODIFIED IN THE EXPORT SECTOR BY LOW-COST INPUTS FROM MANUFACTURING IN CHINA. SPECULATION (IN PROPERTY OR STOCKS AND SHARES) IS ENCOURAGED BY THE VERY LOW INTEREST ON OFFER FROM THE BANKS. SOME PEOPLE DETECT A SLOWDOWN IN INVESTMENT HERE BECAUSE OF HIGH COSTS. THE TIGHTENING OF CREDIT IN CHINA WORRIES CERTAIN SECTORS AND COULD LEAD TO A SLOWDOWN IN CROSS-BORDER INVESTMENT IN GUANGDONG. THE RESTAURANT TRADE IS SAID TO BE A BAROMETER OF LOCAL SENTIMENT, AND TO BE LANGUISHING. SO, DESPITE THE STOCK MARKET HIGH, THERE IS A FEELING OF UNCERTAINTY IN THE AIR. THAT UNCERTAINTY COULD BE WORSENED QUITE SUDDENLY IF THE CONSTITUTIONAL TALKS FAIL AND CHINA TURNS UP THE HEAT, EITHER ON ITS SECOND KITCHEN STOVE, OR IN THE OTHER WAYS.
POSSIBLE CHINESE RETALIATION.
7.
BRITISH FIRMS MAY FEEL THE HEAT FIRST. JARDINES, STRUGGLING BACK FROM AN EARLIER TARGETTING, COULD AGAIN SWEAT IF THE TEMPERATURE RISES. ANOTHER OBVIOUS CASE IS THE CANTON METRO WHERE FRENCH FIRMS HAVE ALREADY BEEN POLITICALLY EXCLUDED AS A QUID PRO QUO FOR GALLIC MISBEHAVIOUR OVER TAIWAN. DESPITE DISCLAIMERS (NO DOUBT FOR GATT REASONS) POLITICAL EXCLUSION OF UK FIRMS FOR OUR QUOTE INCORRECT ATTITUDE UNQUOTE OVER HONG KONG IS DEFINITELY ON THE CARDS. WE HAVE HAD SUFFICIENT HINTS. GERMAN FIRMS COULD BENEFIT, PROVIDED THAT THE BUNDESTAG CHITHERTO UNIMPRESSED BY CHINA'S HUMAN RIGHTS PERFORMANCE) VOTES THE NECESSARY AID FUNDS.
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